County places moratorium on loans to junior taxing districts

Whitman County is looking to establish policies and procedures regarding intergovernmental loans and has put a moratorium on loans until those guidelines can be established.

“We’re trying to get our ducks in a row,” said Mark Clinton, county treasurer.

The Board of County Commissioners Tuesday voted unanimously to place the moratorium on loans between the junior taxing districts and the county.

“It’s for the protection of the county’s financial position,” said Commissioner Art Swannack.

Clinton told the Gazette the county has fielded a number of requests from junior taxing districts for loans, and for the purpose of making sure everything is done correctly, the treasurer’s office is working to establish policies and procedures before issuing further loans.

“We’ve had over the last three-and-a-half years several junior taxing districts asking for loans to cover whatever they need,” he said. “The commissioners felt that there was a slew of those, so they wanted us to take some time to see what the procedures are.”

Commissioner Michael Largent said it is important to develop proper procedures and policies.

“We’re looking at how those loans should occur or if they should occur,” he said. “In the meantime, we should not be giving out those loans to protect the county.”

One of the requests most often received for intergovernmental loans has been when a junior taxing district has a levy passed during a special election but needs to meet costs before they realize anticipated revenue from the special levy.

For example, a levy approved during the upcoming February special election will not generate revenue until the start of 2018.

Last March, Tekoa Parks and Recreation District requested a $70,000 loan from the county after its maintenance and operation levy passed in the 2016 February special election. The district borrowed the $70,000 with the promise to pay it back in 2017 when levy funds became available.

Tekoa’s parks and rec funding, used mostly for swim pool operation, fell out of sync because the original request failed to pass in November of 2015. An approval at that time would have put the levy on the 2016 tax statements and paid the pool bills last summer. Its levy did pass in February of 2016.

Swannack said one issue that comes up when junior taxing districts do this is that they are borrowing from one year and not paying back until the next.

“We operate our budget one year at a time,” he said, noting the loans have been coming out of the county’s general fund. “We need to look at how we are supposed to be doing these loans because they hit our budget all of a sudden.”

Swannack said something else the policies and procedures will address is if the county is even the right place for the junior taxing districts to be looking to when it comes to borrowing money.

“The sooner this is developed, the better,” said Largent.

Clinton said he is working with other counties to research their policies and procedures in regard to this matter. This, he said, should help Whitman County to establish its guidelines.

“We want to put something into writing now,” he said. “Until then, we want to slow down on stuff a little bit.”

He said he is looking into matters such as length of loans, terms and interests. Clinton also noted that establishing policies and procedures will help the county with its position for its state audit. Whitman County has not had a clean audit for more than a decade.

“This will be one of those policies that we can show them,” he said.

Clinton said he may be able to have the policies and procedures ready for the commissioners by February.

“I would anticipate this will be a very short-term moratorium,” said Largent.